Medicare Advantage plans gain favor as NE Ohioans age

As more of the population ages into Medicare, some health systems in Northeast Ohio are helping design insurance plans for seniors.

Cleveland Clinic recently announced two separate partnerships with Humana Inc. and with Anthem Blue Cross and Blue Shield in Ohio, each to create Medicare Advantage plans, which are privately run versions of the federally funded health care program for seniors. University Hospitals has teamed up with SummaCare to co-brand such a plan.

"The Medicare Advantage market is a relatively stable market for insurers," said Gretchen Jacobson, associate director of the program on Medicare policy at Kaiser Family Foundation. "Payments are set and relatively steady, insurers know what to expect and enrollment in Medicare Advantage plans has been on the rise, so it's an attractive market for many insurers."

The plans are so attractive that a total of 2,317 Medicare Advantage plans will be available for enrollment in 2018 — the largest number of plans available since 2009, according to data from Kaiser Family Foundation, a nonprofit focused on national health issues.

Medicare Advantage plans offer stability to insurers, a chance to keep patients within the system for providers and potential profitability for both. Plus, officials say, the plans offer more choices for seniors at a lower cost.

'Significant opportunity'

Many insurers have reported significant membership gains in the plans over the last few years as baby boomers age into the Medicare program. Some insurers have entered the Medicare Advantage space, while others have left. Overall, the growth has been driven by existing insurers doubling down in the market and expanding their footprint, Jacobson said.

Modern Healthcare, a sister publication of Crain's Cleveland Business, reported in April that payment rates for insurers that sell Advantage plans will rise by 0.45% on average for 2018 — a better-than-expected pay bump.

Medicare Advantage offers a "significant business opportunity," said Allan Baumgarten, a Minnesota-based consultant who studies health care markets across the country.

The market, in addition to being relatively stable, is growing. In 2017, one-third of Medicare beneficiaries, more than 19 million people, are enrolled in Medicare Advantage plans. That's more than triple the 5.3 million people who were enrolled in 2004.

In Northeast Ohio counties, the penetration rate, or the percent of Medicare beneficiaries in each county who are enrolled in Medicare Advantage plans, ranges from 19% in Huron County to 47% in Stark County.

Some areas offer a clear opportunity to pick up more Medicare Advantage enrollees, while that may be a heavier lift in counties with a higher penetration rate, Baumgarten said.

Kevin Sears, executive director of Cleveland Clinic Market & Network Services, said he expects the Clinic plans to pick up enrollees from three main groups: Those aging into Medicare, beneficiaries who are already enrolled in Medicare Advantage plans who will switch to the Clinic's $0 monthly premium offerings, and those enrolled in traditional Medicare who will switch to an Advantage plan.

"We fully expect that the penetration of Medicare Advantage plans will continue to increase as more traditional beneficiaries switch to Medicare Advantage," Sears said.

For 22 years, SummaCare has offered Medicare Advantage plans, which represent a "significant" portion of business for Summa Health's health insurance company and have been "very critical" to its success, said Anne Armao, SummaCare's vice president of marketing and Medicare and individual products.

In 2014, SummaCare was sanctioned by the Centers for Medicare and Medicaid Services for its Medicare Advantage plans, but has since recovered from that bump in the road, boasting a 4.5 out of five star rating from CMS.

"We have outstanding customer service satisfaction and our membership is growing, so we've done very well," Armao said.

Sharing the risk

SummaCare is co-branding its existing Medicare products with University Hospitals in markets with the health system's facilities through a new collaborative agreement the two announced in September. Known as University Hospitals Medicare Advantage from SummaCare, the collaboration builds on a 10-year relationship between UH and SummaCare.

The arrangement has built in a number of incentives for UH to perform on a number of metrics that improve quality and lower cost, said Brent Carson, UH vice president of managed care.

"It's really enabling us — the health plan and the provider — to work together in a more integrated fashion, where in the past we were operating very independently," he said.

The stability and growth of the Medicare Advantage market both helped the Clinic in deciding to partner in that space. Plus, the premiums are risk adjusted for more resource intensive or chronically ill patients, Sears said.

"It's nice not to have to worry about solvency," he said. "We don't have those concerns with the Medicare Advantage plans that we work with."

The Clinic has a shared-risk arrangement for both of its new partnerships. To the extent that there's a higher prevalence of chronic disease among Medicare beneficiaries, which Sears said often is the case, there's greater opportunity to manage those conditions and avoid acute exacerbations that may land someone in a hospital.

"And so as we manage care more effectively among seniors with a higher prevalence of chronic disease, we're able to have a greater impact on the overall health and wellbeing of the populations," Sears said. "We're able to create what Don Berwick, formerly head of CMS, calls the population health dividend and we're able to share that dividend with Medicare beneficiaries, with our Medicare Advantage partners and obviously with the Clinic."

While that's all nice, Sears said, patients are the foremost reason the Clinic offers these plans, which provide more options, richer benefits and more affordable solutions.

Jacobson said there are various features of Medicare Advantage plans that make them an attractive choice for consumers: out-of-pocket costs can be lower and they often provide benefits that aren't available on traditional Medicare, such as dental, vision, hearing aids and gym memberships.

The trade-off, however, is that the plans often limit enrollees' provider network and restrict which doctors they can see, whereas in traditional Medicare, beneficiaries can see any provider who accepts Medicare.

That trade-off for consumers can be a big draw for providers, who are trying to keep care within their systems, Baumgarten said.

"The hospital systems are trying as much as possible to keep that care within their own providers rather than see it leak out and go to other providers whether for inpatient or for outpatient," he said. "And so they think that having their own Medicare Advantage plan gives them additional tools in keeping these patients within their own provider system."

Plus, providers are looking to maximize the amount of money they get for caring for seniors, Baumgarten said. "And they think that if they have their own Medicare Advantage plan that they're able to control more of that health care dollar as opposed to being somewhere further down on the proverbial health care food chain."